The 12-count indictment handed down by a grand jury in New York alleges that from 2002 to 2008, Melissa G. King transferred more than $40 million into various nonunion bank accounts she used to spend on personal items.

February 18, 2010

Federal prosecutors in New York indicted a benefits administrator on charges of embezzling more than $40 million from a union’s health care and pension funds.

In the indictment filed Wednesday, February 17, in federal court in Manhattan, U.S. attorneys charged Melissa G. King with taking millions of dollars from a union representing construction workers who dig New York’s subways and water tunnels.

King had been hired to administer three benefit funds for the union, formally known as the Compressed Air and Free Air Foundations, Tunnels, Caissons, Subways, Cofferdams, Sewer Construction Workers Local 147. The funds were used to pay retirement benefits, pension annuities, certain medical expenses, unemployment and death benefits, workers’ compensation and severance payments.

King, 58, was hired by the union to collect union dues, fund and maintain the union’s various bank accounts and make filings with regulatory agencies.

The union paid King about $3.8 million from 2002 to 2008 for these services, prosecutors say.

King allegedly spent $5 million on at least nine horses and “horse expenses,” amassing a large collection of show horses.

King allegedly also used the money to hire housekeepers and pay the mortgage on a $900,000 property. The indictment states she spent millions of dollars on clothing, jewelry and luxury cars, including a Porsche Cayenne sport utility vehicle, with funds diverted from the union.

Preet Bharara, the U.S. attorney for the Southern District of New York, said that King then deposited $11 million into various bank accounts held by her company, King Care. Bharara also said King used the union money to pay for more than $7 million in personal expenses on a credit card.

King has denied wrongdoing, according to press reports.

Prosecutors first unveiled the case in a criminal complaint in December.

Irregularities had also been found in King’s previous dealing with another union, the United Probation Officers Association; she managed its health care benefits funds.

An audit performed by the New York Comptroller’s Office found that the probation officers union had allowed King to charge the union $776,000 for computer equipment that should have come out of the fees previously paid to King for her services, according to The New York Times.